Human Rights and the OECD Guidelines for Multinational Enterprises: Normative Innovations and Implementation Challenges John Ruggie Corporate Social Responsibility Initiative, Harvard Kennedy School Tamaryn Nelson Corporate Social Responsibility Initiative, Harvard Kennedy School May 2015 Working Paper No. 66 A Working Paper of the: Corporate Social Responsibility Initiative A Cooperative Project among: The Mossavar-Rahmani Center for Business and Government The Center for Public Leadership The Hauser Center for Nonprofit Organizations The Joan Shorenstein Center on the Press, Politics and Public Policy Citation This paper may be cited as: Ruggie, John G., and Tamaryn Nelson. 2015. “Human Rights and the OECD Guidelines for Multinational Enterprises: Normative Innovations and Implementation Challenges.” Corporate Social Responsibility Initiative Working Paper No. 66. Cambridge, MA: John F. Kennedy School of Government, Harvard University. Comments may be directed to the authors Corporate Social Responsibility Initiative The Corporate Social Responsibility Initiative at the Harvard Kennedy School of Government is a multi-disciplinary and multi-stakeholder program that seeks to study and enhance the public contributions of private enterprise. It explores the intersection of corporate responsibility, corporate governance and strategy, public policy, and the media. It bridges theory and practice, builds leadership skills, and supports constructive dialogue and collaboration among different sectors. It was founded in 2004 with the support of Walter H. Shorenstein, Chevron Corporation, The Coca-Cola Company, and General Motors. The views expressed in this paper are those of the authors and do not imply endorsement by the Corporate Social Responsibility Initiative, the John F. Kennedy School of Government, or Harvard University. For Further Information Further information on the Corporate Social Responsibility Initiative can be obtained from the Program Coordinator, Corporate Social Responsibility Initiative, Harvard Kennedy School, 79 JFK Street, Mailbox 82, Cambridge, MA 02138, telephone (617) 495-1446, telefax (617) 496-5821, email [email protected]. The homepage for the Corporate Social Responsibility Initiative can be found at: www.hks.harvard.edu/centers/mrcbg/programs/csri HUMAN RIGHTS AND THE OECD GUIDELINES FOR MULTINATIONAL ENTERPRISES: NORMATIVE INNOVATIONS AND IMPLEMENTATION CHALLENGES* John Gerard Ruggie and Tamaryn Nelson John Gerard Ruggie is the Bertholz Beitz Professor in International Affairs and Human Rights at Harvard's Kennedy School of Government, and Affiliated Professor in International Legal Studies at Harvard Law School. He has also served as United Nations Assistant Secretary- General for Strategic Planning, and as the UN Secretary-General's Special Representative for Business & Human Rights. His most recent book, Just Business: Multinational Corporations and Human Rights, has been translated into Chinese, Japanese, Korean, Spanish and Portuguese. He is a Fellow of the American Academy of Arts & Sciences, and in 2014 he received the Washington Foreign Law Association’s annual award to the individual who made the most important contribution to the development and implementation of international law. Tamaryn Nelson received her Masters in Public Administration from the Kennedy School in 2014, where she was a Jorge Paulo Lemann Fellow, focusing on business and human rights. Currently she is a researcher at the Kennedy School’s Corporate Social Responsibility Initiative. Previously, she led Amnesty International’s research in Ecuador, Peru and Venezuela and Planned Parenthood’s Global Advocacy Program. From 2003-2010, Nelson led the Latin America Program at WITNESS, an NGO founded by musician Peter Gabriel that uses video to document human rights abuses. She began her career at the Pan American Health Organization and at the Center for Justice and International Law. Originally from Brazil, her undergraduate degree is from Georgetown University’s School of Foreign Service and she has a Certificate in International Human Rights Law from Oxford University. *The authors are deeply indebted to participants in the OECD National Contact Point system and other experts closely involved in it for their helpful input and suggestions for improving earlier drafts, all of whom were promised anonymity. ©John Gerard Ruggie INTRODUCTION Business and human rights became an increasingly prominent feature on the international agenda in the 1990s. Global markets widened and deepened significantly as a result of trade liberalization, privatization, deregulation, and off-shoring production as well as financial centers. The rights of multinational corporations to operate globally became legally enshrined in a vast expansion of bilateral investment treaties and investment chapters of bilateral and regional free trade agreements, as well as a new international regime protecting intellectual property. According to one UN study, some 94 percent of all national regulations related to foreign investment that were modified in the decade from 1991 to 2001 were intended to facilitate it.1 Multinational corporations did well subsequently, and so too did people and countries that were able to take advantage of the opportunities created by this transformative process. But others were less fortunate. Global social and environmental protections lagged behind, and domestic safety nets, where they existed at all, began to fray. Income inequalities began to rise. International attempts to regulate the conduct of multinational corporations, going back to the 1970s, continued to fail. Sweatshops, displaced communities, child labor, forced and bonded labor, corporate security providers raping and sometimes killing demonstrators or mere bystanders, are among the abuses that were amply documented. What requires better documentation, if these global imbalances are to be corrected, are the means by which the global and local communities have sought to redress the imbalances, and how they might be improved. This paper takes one small step in that direction. It analyzes the first and still one of the very few international mechanisms that governments have established enabling individuals, communities or their representatives to bring complaints against multinational corporations: the Guidelines for Multinational Enterprises (“Guidelines”) promulgated by the Organization for Economic Cooperation and Development (OECD). Our interest in the Guidelines in this paper is two-fold. First, we want to identify patterns of use over time in order to better understand them. Second, we want to see what if any difference exists in these patterns since the endorsement by the United Nations Human Rights Council in 2011 of the Guiding Principles on Human Rights, core elements of which were incorporated into the 2011 OECD Guidelines revision. Finally, we offer some concluding thoughts about how this complaints mechanism should be strengthened. I. A BRIEF HISTORY THE ORIGINAL GUIDELINES In1976, on the eve of United Nations negotiations on a Code of Conduct on Transnational Corporations, which was abandoned some fifteen years later, the OECD adopted a Ministerial Declaration on International Investment and Multinational Enterprises. It was the first 1 multilateral instrument to include the principle of “national treatment” in the investment context: according foreign-controlled enterprises treatment “consistent with international law and no less favorable than that accorded in like situations to domestic enterprises.”2 Perhaps in an attempt to couple this principle with a recognition of responsibilities on the part of multinational corporations, the Declaration annexed a set of “recommendations” that the OECD member states addressed to multinational enterprises—the original OECD Guidelines for Multinational Enterprises. OECD member states were obligated to promote the Guidelines, while the recommendations to multinationals were non-binding. Multinationals were advised to comply with national laws, encouraged to make a positive contribution to economic and social progress in their countries of operation, contribute to technology transfer, and not harm the environment. Apart from freedom of association and the right to bargain collectively, which are recognized in International Labor Organization conventions, the Guidelines referenced no other international standards in relation to human rights.3 In 1984, OECD members agreed to establish so-called National Contact Points (NCPs), an office within each government whose job it would be not only to promote the Guidelines, but also “to contribute to the solution of problems which may arise” related to the observance of the Guidelines4—in short, a complaints mechanism, which the OECD refers to as “specific instances.”5 Organized labor subsequently sought such help on a number of occasions in connection with anti-union activities by companies, but by the 1990s this mechanism had “slumped into disuse.”6 Companies were not obliged to participate in the complaints process, and if a National Compact Point (NCP) agreed with a complaint the sole consequence was that it could issue a report to this effect. Following the collapse of the OECD negotiations on a Multilateral Agreement on Investment (MIA) in 1998, whose critics (including several member states) charged that it excessively favored the rights of investors over public interest considerations, the OECD revised the Guidelines in 2000.7 Corporate observance was still voluntary.